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2d 294
The evidence before the referee shows that by letter from Detroit, Michigan,
dated June 12, Ex-Cello inquired of the county clerk about filing procedures.
This letter was returned with an undated endorsement informing Ex-Cello that
the fee for filing a conditional sales contract was fifty cents and that a
conditional sales contract for property in Utica, New York, should be filed with
the Oneida county clerk. This endorsement was identified by the deputy county
clerk at the trial as having been typed in the clerk's office. Ex-Cello sent the
contract and a check for fifty cents with a covering letter dated in Detroit on
June 20, requesting evidence of filing. Again the clerk's office returned the
letter to Ex-Cello in Detroit with the two enclosures and the following undated
endorsement: "Miles H. Knowles/nt
"We are returning the contract for a notarial certificate from the County Clerk
of the County of Wayne to be attached to the last sheet of the contract. This will
have to be taken care of before it can be filed in this office.
FRANK R. SENIOR
Oneida County Clerk"1
The deputy county clerk testified that it was normal office procedure not to
time-stamp any correspondence that was not accepted for filing, but that this
letter must have been received on or about June 21. He based his testimony on
the date of the June 20 letter from Ex-Cello. The notarial certificate requested
was dated June 27 in Detroit and the clerk's office time-stamped the contract for
filing on June 29, 10:09 A. M.
The referee and the district court considered it unnecessary to determine when
the letter dated June 20 was received by the county clerk because they held
that, since the bank's instrument was accepted for filing before Ex-Cello's, the
bank had priority. This holding was based on an erroneous view of the
governing New York law and must therefore be reversed.
10
11
Under these statutes the inquiry is as to what constitutes "filing." In the light of
the extensive body of relevant law on analogous New York filing statutes, we
hold that presentation of a conditional sales contract together with the required
filing fee constitutes filing for the purpose of establishing priority over a chattel
mortgage filed thereafter.
12
The statutes governing the filing of trust receipts, N.Y. Personal Property Law,
58-e(4), chattel mortgages, N.Y. Lien Law, McKinney's Consol.Laws, c. 33,
230-c(4), and real property conveyances and mortgages, N.Y. Real Property
Law, 317, provide expressly that presentation for filing together with the
filing fee constitutes filing.3
13
The cases supporting the rule that presentation of the contract together with the
fee constitutes filing involve for the most part the issue of who should bear the
burden of improper indexing on the part of county clerks. See, e. g., Mutual
Life Ins. Co. v. Dake, 87 N.Y. 257, 263-264 (1881). As is indicated above,
New York Personal Property Law, 70, supra, lists three steps for completing
the recordation of such contracts: (1) filing, (2) entering, and (3) indexing. A
mistake by the county clerk or his deputy in any one of these three steps may
mislead a searcher of the record to his prejudice. Mistakes by the clerks in
indexing, e. g., Mutual Life Ins. Co. v. Dake, supra, or recording, Reid v. Town
of Long Lake, 44 Misc. 370, 89 N.Y.S. 993 (Sup.Ct. 1904), Pacific Finance
Corp. v. Traffic Tire & Rubber Co., 171 Misc. 1034, 14 N.Y.S.2d 613
(N.Y.City Ct.), aff'd per curiam, 14 N.Y.S.2d 614 (App.Term, 1st Dep't 1939),
O'Neill v. Lola Realty Corp., 264 App.Div. 60, 63, 34 N.Y.S.2d 449, 451 (2d
Dep't 1942) (dictum), have been held not to invalidate the filing party's security
The New York case which most closely resembles our case is New York
County Nat'l Bank v. Wood, 169 App.Div. 817, 153 N.Y.S. 860 (1st Dep't
1915), aff'd mem. sub nom. New York County Nat'l Bank v. Peckworth, 222
N.Y. 662, 119 N.E. 1062 (1918). There the clerk improperly refused to file an
assignment and returned the document to the person attempting to file it.
Presentation to the clerk, even though he refused to accept the document, was
held to constitute a filing as of the time of first receipt.
15
Two New York cases are cited as holding that delays in receipt or filing by the
clerk are matters for which the person seeking to file is responsible. Security
Discount Associates, Inc. v. Lynmar Homes Corp., 13 A.D.2d 389, 216 N.Y.S.
2d 543 (2d Dep't 1961); Crouse v. Johnson, 65 Hun 337, 20 N.Y.S. 177, leave
to appeal denied, 66 Hun 631, 22 N.Y.S. 1114 (4th Dep't 1892). These cases
are not sufficiently lose to the present case to materially weaken Ex-Cello's
claim. In Crouse v. Johnson, 65 Hun at 340, 20 N.Y.S. 177, the mortgagee left
his papers at an empty office, and the clerk did not file until he arrived the
following morning, by which time the sheriff had executed levy on the goods.
In Security Discounts the suit was between a person whose mortgage was
received by the county clerk in the 9 A. M. mail, but was date-stamped 10:47
A.M., and a person whose mortgage was personally delivered and date-stamped
9:05 A.M. The court held in favor of the filing by personal delivery since the
exact time of the clerk's inspection of the mailed document was in doubt.
16
There is no inequity in the result reached under New York law. If one balances
interests between a creditor who does his best to file and is prevented by the
clerk from doing so, and another who does his best to search and is prevented
by the clerk from finding what he is looking for, the loss may well be held to
fall on the second creditor rather than the first because of the first creditor's
priority of effort.
17
Notes:
The assumption was made and not disputed by the bank that the contract and
filing fee were in proper form and that the county clerk's demand for a notarial
certificate was improper under the relevant New York statutes. Apparently,
there is no requirement that the contract or copy required to be filed contain a
signature, acknowledgment, or attestation of any kind, let alone a notarial
certificate. See 3 Jones, Chattel Mortgages and Conditional Sales 1063 (6th
ed. 1933). N.Y. Personal Property Law, McKinney's Consol.Laws c. 41, 64-a
requires that non-commercial conditional sales contracts for the sale of goods
under $3000 in value be signed by the buyer and this is obviously not
applicable here. Other than this provision, the statute is silent as to any form of
acknowledgment by the parties. See N.Y. U.C.C. c. 38, 9-402, N.Y.
Annotations 1, 3, and 4, 62 (Pt. 3) McKinney's Consol.Laws of N.Y. Annot.,
p. 568 (1964)
It seems probable that the Oneida county clerk's office was erroneously
applying the formal requirements for the recording of real property
conveyances which must be "duly acknowledged by the person executing the
same * * * and such acknowledgment * * * duly certified when required by this
chapter." N.Y. Real Property Law, McKinney's Consol.Laws, c. 50, 291.
Section 299 thereof permits acknowledgment before an out-of-state notary
public and 311, subd. 2 requires that the notary's certificate be authenticated
by certain public officers of the other state.
These sections of the Personal Property Law (and those of the Lien Law
referred to hereafter) were superseded by the Uniform Commercial Code which
took effect on September 27, 1964, after the relevant dates of this case. The
applicable provisions of these Laws, though now repealed, will be referred to in
this opinion as if they were still in effect, as indeed they were at the time
involved
In re Labb was cited with apparent approval by this court in Empire State Chair
Co. v. Beldock, 2 Cir., 140 F.2d 587, 588 n. 3, cert. denied, 322 U.S. 760, 64
S.Ct. 1278, 88 L.Ed. 1587 (1944), and Constance v. Harvey, 2 Cir., 215 F. 2d
571, 573 (1954), cert. denied, 348 U.S. 913, 75 S.Ct. 294, 99 L.Ed. 716 (1955)
(dictum)